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Old 09-05-2014, 06:37 AM   #21
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On a portfolio of that size, I'd push for an ongoing fee of 50 basis points. Before doing that, though, calculate the total amount you are giving up to the advisor over 30 years. You'll be shocked.

You are much better off working with someone to develop a plan you can manage. Your father wrote a tremendous book and passed it on to you. Don't rewrite it, but add a few chapters.
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Old 09-05-2014, 06:53 AM   #22
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I think the first decision should be about your own orientation. For many of us here, a relatively simple set of diversified index funds is the way to go. The size of your portfolio will have only a slight impact on how that is manged. Others choose managed mutual funds and or individual equities, bonds etc. Fidelity, Schwab, or Vanguard can help you pick a reasonable AA of index funds. If you would like to DYI after a break in period a fee only advisor can help you with either approach - but be careful that the advisor you select is comfortable with the direction you want to move in (e.g. low cost index funds). If you want a long term advisor you still need to decide what way you want to go. If it was me,in that case, I would probably look for a Dimensional Funds Advsisor (DFA). They can put you in a structured set of index funds and keep you on track, but you pay for it.
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Old 09-05-2014, 07:10 AM   #23
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I agree that you are giving up a lot if you insist on having a local adviser. It is kind of like insisting on finding a mate in a small town - needlessly limiting. With that much money, Vanguard will hold your hand for free and is much more likely to put you into efficient, low cost index funds.
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Old 09-05-2014, 07:25 AM   #24
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For what it is worth Vanguard is currently charging 30 basis points for a set of services that the OP might find would fit his needs.
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Old 09-05-2014, 08:09 AM   #25
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Ok. So Vanguard charges 30 basis points.

Schwab does it for free but will charge $8.95 a trade.

And yes, you can afford to travel to see them and your dedicated advisor will return calls

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Old 09-05-2014, 09:42 AM   #26
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On a portfolio of that size, I'd push for an ongoing fee of 50 basis points. Before doing that, though, calculate the total amount you are giving up to the advisor over 30 years. You'll be shocked.

You are much better off working with someone to develop a plan you can manage. Your father wrote a tremendous book and passed it on to you. Don't rewrite it, but add a few chapters.
Well put, and exactly what I wish to do: working WITH someone to develop a portfolio I can eventually manage myself. I realize the cost over thirty years would be huge to keep them managing it. No way. All I want to do is get some good professional advice for say, a year, to get the complexity of this thing down to something that I can handle, and do it in a way that factors in gains and risk in a changing market. Over that time, I will also learn by doing. Once I get the portfolio to a place I feel comfortable, I will take it on myself.

I am as skeptical and resistant to a advisor managed portfolio as the next person on this forum, but the difference is that I didn't create this portfolio myself over time, I inherited it with all it's complexities and risks. It's about making smart choices in getting it more tailored to our own needs, but doing it in a timely way that factors in costs and tax consequences.

I like the hourly idea, personally. In this way I can sit with this person and address particular areas of the entire portfolio without having to 'pay' an annual percentage to manage the whole portfolio. In that way, decisions are always run by me, and I can vett & process the trades myself which would probably help the learning process.
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Old 09-05-2014, 10:24 AM   #27
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50 basis points on 4 million is $20,000. At $100/hour that would be 5 weeks of full time work. Please don't pay anyone 50 basis points to get you on the right track. If you must pay someone, do it on a reasonable hourly rate. But, I still think your best bet is Vanguard who would handle this for you with no additional charge and would provide you with their very lowest costs funds. Maybe 1/2 and 1/2 with fidelity and get a second opinion for free.
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Old 09-05-2014, 10:25 AM   #28
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..............I am as skeptical and resistant to a advisor managed portfolio as the next person on this forum, but the difference is that I didn't create this portfolio myself over time, I inherited it with all it's complexities and risks. It's about making smart choices in getting it more tailored to our own needs, but doing it in a timely way that factors in costs and tax consequences.............
I think that you've got it right. Deconstruct the complex portfolio into a simple portfolio with minimal tax consequences. Then just rebalance it yourself yearly.
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Old 09-05-2014, 10:45 AM   #29
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Ok. So Vanguard charges 30 basis points.

Schwab does it for free but will charge $8.95 a trade.

And yes, you can afford to travel to see them and your dedicated advisor will return calls

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I think you may be comparing apples and oranges. Vanguard has two levels of services - one (that I have used) would also be free but the other, with a little more handholding, would be at a sliding fee beginning at 75 bps for the first million, 35 bps for the second million and 20 bps for amounts more than $2 million. See http://www.vanguardinformation.com/p...SSD_102009.pdf

If I were the OP I would contact Vanguard and start out with the pay version but tell them that you would like to be on a path to learn to DIY and be off the 30 bps version in 3 years or less.
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Old 09-05-2014, 11:50 AM   #30
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Just a thought (I have no first hand experience with inheriting a portfolio of this size/complexity), but it seems most of your concerns are centered around the tax consequences of liquidating some of the holdings that you are not familiar with. Isn't that a question better geared to a CPA, who I would assume would be more likely to charge an hourly fee?
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Old 09-05-2014, 02:32 PM   #31
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I think you may be comparing apples and oranges. Vanguard has two levels of services - one (that I have used) would also be free but the other, with a little more handholding, would be at a sliding fee beginning at 75 bps for the first million, 35 bps for the second million and 20 bps for amounts more than $2 million. See http://www.vanguardinformation.com/p...SSD_102009.pdf

If I were the OP I would contact Vanguard and start out with the pay version but tell them that you would like to be on a path to learn to DIY and be off the 30 bps version in 3 years or less.
Do you get a dedicated advisor at Vanguard whose office you can walk into or is it over the phone only? I like having a free advisor

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Old 09-05-2014, 02:59 PM   #32
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Just a thought (I have no first hand experience with inheriting a portfolio of this size/complexity), but it seems most of your concerns are centered around the tax consequences of liquidating some of the holdings that you are not familiar with. Isn't that a question better geared to a CPA, who I would assume would be more likely to charge an hourly fee?
If you don't already have a good CPA you should find one. They can help you with the tax side of things - pointing out various tax pitfalls and there are many. And your numbers are big enough that mistakes can be pretty large.

A CPA won't help you with your investment strategy, but if you already have a target portfolio, a CPA can help you plan a tax efficient way to get there.
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Old 09-05-2014, 03:20 PM   #33
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If you don't already have a good CPA you should find one. They can help you with the tax side of things - pointing out various tax pitfalls and there are many. And your numbers are big enough that mistakes can be pretty large.

A CPA won't help you with your investment strategy, but if you already have a target portfolio, a CPA can help you plan a tax efficient way to get there.
yes, I have a good CPA who can work with us on the tax issues, but like you say, he is not going to be good at overhauling a portfolio from a purely investment perspective.
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Old 09-05-2014, 04:57 PM   #34
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Well put, and exactly what I wish to do: working WITH someone to develop a portfolio I can eventually manage myself. I realize the cost over thirty years would be huge to keep them managing it. No way. All I want to do is get some good professional advice for say, a year, to get the complexity of this thing down to something that I can handle, and do it in a way that factors in gains and risk in a changing market. Over that time, I will also learn by doing. Once I get the portfolio to a place I feel comfortable, I will take it on myself.

I am as skeptical and resistant to a advisor managed portfolio as the next person on this forum, but the difference is that I didn't create this portfolio myself over time, I inherited it with all it's complexities and risks. It's about making smart choices in getting it more tailored to our own needs, but doing it in a timely way that factors in costs and tax consequences.

I like the hourly idea, personally. In this way I can sit with this person and address particular areas of the entire portfolio without having to 'pay' an annual percentage to manage the whole portfolio. In that way, decisions are always run by me, and I can vett & process the trades myself which would probably help the learning process.
Be careful with the "fee only" label when you look. To us DIY'rs it means, "pay an hourly fee for a plan, or ongoing advice." It seems that everyone offering a free dinner these days is a fee-only advisor. What THEY mean by that is very different from what most here mean.

I think you'll do well by searching the sites mentioned by others. Then run the name by your CPA. You'll benefit greatly when they cooperate. You have quite a few securities, and you actually may be better off keeping some.

I think it would be rather nice to have 100K in qualified dividends, and stay in the 15% tax bracket.

For all we know you may be sitting on the most perfect portfolio of all time.

By the way, you can plug all of that into a Morningstar free portfolio analysis, and get some measure of all the risk, and how it performs. What if you found it actually outperforms, and has lower risk than conventional balanced portfolios?
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Old 09-05-2014, 05:17 PM   #35
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I'm going to add my voice to the chorus who suggest you get a CPA and also consider putting the money at Vanguard and using their adviser service. Except for the trust, you should be able to transfer all of the estate to them in kind without incurring any tax issues. The only fee would be the one from the brokerage house where you are currently invested.

Also, I recommend spending time at the Boglehead forum and get started with their reading list here: Getting started - Bogleheads

You may want to consider posting your list of assets on that forum. You'll be swamped with a lot of free and mostly useful advice.

You should also look at their wiki and in particular their page on managing a windfall here: Managing a windfall - Bogleheads
Unless your father's investments are terribly bad (it doesn't sound like they are), I'd not rush to do anything until I understood the tax, cost, and risk of any changes. In particular, stay away from any "investment" that emphasizes its low risk, high return, or tax avoidance features. They tend to be either ways for "advisers" to make money from you at best or at worst outright scams.
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Old 09-05-2014, 05:23 PM   #36
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Again, if you recently inherited this portfolio, you got a step up in basis, so there should be little tax or no tax issue with liquidating and starting up with a simpler plan.

Good luck.
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Old 09-05-2014, 05:27 PM   #37
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There's a fee-only financial planner (marottaonmoney.com) that posts a bunch of good reports and blogs. Before I met with a financial planner, I'd spend an entire 8 hour day reading stuff on that site. That way, you'd be able to give a decent "sniff test" on what your fee only planner is recommending. Just because the planner is fee only and claims to be a fiduciary, doesn't mean there are not bad apples out there.

I wouldn't go for a "percent of assets under management" fee structure...I'd just pay a one-time fee to two or even three independent planners and see how close their recommendations are. There is no substitution for educating yourself because there's nobody in the world that has more at stake than you do.
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Old 09-05-2014, 05:29 PM   #38
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Are you in the 15% marginal income tax bracket? If so, then long-term capital gains are taxed at 0%, so it could be easy to sell things and convert to an index fund portfolio that would basically be on autopilot.
I agree with LOL.

I think you father was pretty smart guy and your portfolio may not need any changes. Things invested in Index funds probably don't need any changes at all. Even many individual securities may not need any changes.

You should not rush to redo portfolio that you dad created and should not be on any rush to get an Financial Advisor.
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Old 09-05-2014, 06:03 PM   #39
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Hesperus, you have gotten a lot of good advise from other members but here's my 2 cents:

1. You father was very wise in creating a portfolio consisting of stocks, bonds, MLP etc.instead of just a portfolio of diversified Index funds which charge you at least 0.25-0.35% (viz. @ Vanguard).

2. In my opinion, the portfolio that your father created will give better returns long term but may be a little more volatile than the portfolio consisting of just Index funds. Volatility may increase if you move funds into small cap growth stocks for example. This will increase potential returns but will also increase your portfolio's risk which may result in you selling at the wrong time in the event you find the ride too bumpy. This is counterproductive to managing a diversified portfolio that you balance periodically.

3. The 0.35-0.5% that you will pay a FA will ensure that you stay invested in such a diversified portfolio at all times. Any trades they make for you will not be based on emotions and IMHO the fees that you pay them is like an insurance policy so that you do not make any mistakes on your own based on emotional buy/sell decisions.

So basically, a diversified portfolio of index funds is not much different in terms of annual expenses compared to a diversified portfolio of individual stocks, bonds, MLP etc that is managed by a FA. In the long term (20+ years) the latter portfolio will most likely give you better returns than the former. Just my opinion of course!

Good Luck,
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Old 09-05-2014, 06:12 PM   #40
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3. The 0.35-0.5% that you will pay a FA will ensure that you stay invested in such a diversified portfolio at all times. Any trades they make for you will not be based on emotions and IMHO the fees that you pay them is like an insurance policy so that you do not make any mistakes on your own based on emotional buy/sell decisions.
I am not sure about that. You will be a gold mine for some FA. Simple index funds will do great. But if your father owns high quality stocks like PG, KO, CL, WFC, PM, MO.... I would not be selling them and they may not need to be sold ever.

If you slowly learn and become your own FA you will do best. And a one the first to learn us that money are like soap. The more you use it the less you will have of it. So don't rush into any trades/changes...

Enjoy dividends
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